Composite Interest Rate: End of December 2018

The following is issued on behalf of the Hong Kong Monetary Authority:
 
     The Hong Kong Monetary Authority (HKMA) announced today (January 17) the composite interest rate at the end of December 2018.*
 
     The composite interest rate, which is a measure of the average cost of funds of banks, increased by 11 basis points to 0.89 per cent at the end of December 2018, from 0.78 per cent at the end of November 2018 (see Chart 1 in the Annex). The rise in composite interest rate reflected increases in the weighted funding cost for both deposits and interbank funds during the month (see Chart 2 in the Annex).
 
     The historical data of the composite interest rate from the end of the fourth quarter of 2003 to the end of December 2018 are available in the Monthly Statistical Bulletin on the HKMA website (www.hkma.gov.hk). The next data release is scheduled for February 19, 2019 and will provide the composite interest rate at the end of January 2019.

* The composite interest rate is a weighted average interest rate of all Hong Kong dollar interest bearing liabilities, which include deposits from customers, amounts due to banks, negotiable certificates of deposit and other debt instruments, and Hong Kong dollar non-interest bearing demand deposits on the books of banks.  Data from retail banks, which account for about 90 per cent of the total customers' deposits in the banking sector, are used in the calculation.  It should be noted that the composite interest rate represents only average interest expenses.  There are various other costs involved in the making of a loan, such as operating costs (e.g. staff and rental expenses), credit cost and hedging cost, which are not covered by the composite interest rate.